Some Japan Regional Banks to Report Lower Profit, Nomura Says

May 19 (Bloomberg) -- About 40 percent of Japan’s 84 listed
regional banks are forecasting lower profit this fiscal year as
profitability is squeezed by near zero interest rates, according
to a report by Nomura Holdings Inc.

Of the regional lenders, 35 are forecasting a drop in
profit for the 12 months ending March 31, said Masahiko Sato, a
Tokyo-based analyst at Nomura, in a May 18 report. Combined net
income at all listed regional banks is estimated to climb 6.6
percent to 600.6 billion yen ($6.5 billion), according to Sato.

Growth at Japan’s six largest banks will outpace regional
lenders, with earnings forecast to rise 25 percent to a combined
1.4 trillion yen this year, according to data compiled by
Bloomberg. Mizuho Financial Group Inc., Japan’s third-largest
bank by value, on May 14 forecast net income will jump 80
percent to 430 billion yen this year.

“It looks as though the rebound in profit levels may have
run its course,” Sato wrote in the note about the country’s
regional lenders. “With no prospect of a hike in policy rates,
we find banks anticipate no substantial rise in” core profits.

Sapporo Hokuyo Holdings Inc., based on the northern island
of Hokkaido, is forecasting profit to fall 51 percent to 15.5
billion yen this year. Miyazaki Bank Ltd., located in the south
of Japan, forecast a profit drop of 43 percent to 5 billion yen.

Bank of Japan policy makers are expected to keep the
interest rate at 0.1 percent at a two-day meeting that starts
tomorrow, according to 16 economists surveyed by Bloomberg.

Net interest income, including from loans, at the regional
banks fell 2.9 percent to 3.9 trillion yen in the year ended
March 31, Sato said. Bad loan charges fell 43 percent to 606.9
billion yen at regional lenders last year, helping the banks
report 563.6 billion yen in combined profit, according to Nomura.